740.0011 EW (Peace)/8–246

Memorandum by Mr. Jacques J. Reinstein, Economic Adviser, United States Delegation4


Major Problems in the Economic Clauses of the Peace Treaties



Our past position, which has been shared by the British and French, has been that claims of countries other than the Soviet Union, (notably France, Yugoslavia, Greece, Albania and Ethiopia), should be met out of Italian assets in their territories and certain economic benefits which they will obtain from territorial cessions, together with a share of the munitions producing equipment in Italy which is not technically convertible to peace-time use. The Soviets have indicated that they will press their proposal for $200 million in reparations for Yugoslavia, Greece and Albania.

It is proposed that we maintain our past position. As a matter of tactics, it is our intention to call upon all countries having claims to submit them and justify them. We will attempt, through analysis of the claims and through inquiry as to the assets available from the various sources indicated above, to develop the thesis that no calls on other sources of reparations (principally current production) are required.

In view of the establishment of a specific figure for the Soviet Union, the position which we propose to take may be difficult to maintain, and we may have to consider revising our position as the discussion develops. The Soviet statement of damage sustained as a result of [Page 817] Italian action amounts to $2 billion, which will be satisfied to the extent of 5 per cent. Yugoslavia and Greece can allege that the damages they have suffered from Italy amount to about $10 billion. While these claims are obviously exaggerated, it is likely these countries will be able to show very large losses. Yugoslavia and Albania will benefit substantially by the provisions we have proposed, but the benefits would be considerably less in the case of Greece and perhaps also Ethiopia.

It is assumed that the Secretary will approve the adoption of the position we propose to take. It will undoubtedly be necessary to consult with him closely as the discussion proceeds.

Signor Nenni has indicated that Italy intends to ask that a special commission be established to proceed to Italy for the purpose of examining into Italian capacity to pay reparations. It would be desirable to obtain the Secretary’s views on this question as soon as possible. Should such a commission be established, we may have difficulty in obtaining personnel to represent the United States.


We intend to avail ourselves of our reservation to re-open the Hungarian reparations question5 and to ask for the creation of a special subcommission to examine into the question and to call upon the Hungarian Government for information regarding the Hungarian economic situation. It appears unlikely that the Hungarian Government will attack reparations obligation directly, although it is very likely it will make some statements on the difficulties of the Hungarian economic position. If we can get representatives of the Hungarian Government before a special subcommission, we hope through well-planned questioning to elicit facts necessary to support an attack on the present reparations program.


The Bulgarian armistice provides that Bulgaria is to make reparations to Greece and Yugoslavia but does not specify the amount. The Council of Foreign Ministers agreed that the matter should be left for the determination of the Peace Conference. We would be particularly interested in seeing that some fair settlement in favor of Greece is made in the treaty.

Our plan is to provide for a hearing of the Greek and Yugoslav claims and an examination, perhaps by a special subcommission, of the question of Bulgarian capacity to pay.

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united nations property

(all treaties)

It is our intention to continue to press strongly for full compensation in local currency for all damage to United Nations property resulting from or connected with the war, including removals by the Soviets under the armistice agreements and similar losses.

general economic relations

We intend to continue to press for the inclusion of specific provisions on civil aviation. We regard provision for nondiscriminatory treatment with regard to this subject as an essential part of our program for developing international trade and commerce on a free basis.

We will of course continue to oppose the Soviet proposal for the exception of relations between neighboring countries from the obligations of most-favored-nation treatment, as well as the Soviet proposals regarding state-owned enterprises. Both of these proposals are designed to obtain explicit recognition of a closed economic orbit in Eastern Europe.


At the time of drafting this memorandum, this matter is scheduled for general discussion. It may be that the meeting will wish you to discuss the problem with the Secretary. Our position is that no political solution can survive unless there is both an interim economic program, and the means of establishing a permanent regime.

drafting changes in treaties

The economic provisions of the treaties were prepared for the most part within a very short period of time. Some of the provisions are not well drafted. These provisions will affect the interests of the countries which will participate in the Conference, and they will undoubtedly desire drafting changes in many cases where they do not disagree with the substance of the C.F.M. draft.

It would be helpful to obtain from the Secretary an indication of whether we are free, in our commissions and subcommissions, to vote for drafting changes which will improve the treaty provisions and which do not alter the substance, or whether we are obligated to defend every comma in the drafts.

  1. This memorandum was forwarded to Assistant Secretary of State Clayton the same day with the recommendation that he discuss it with the Secretary at an early date.
  2. Regarding the U.S. reservation, see telegram 3556, July 19, from Paris, and telegram 3960, July 28, from Paris, printed in vol. iii, pp. 5 and 24, respectively.